Time for weekend
Time for another tariff soap opera
Last weekend was EU, this time it’s China edition
S&P futures down, CHF up
Truth social post might be a response for TACO meme that’s going on in US
BBC -: China trade talks have stalled, US treasury secretary says
Truth social
Two weeks ago China was in grave economic danger! The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World. We went, in effect, COLD TURKEY with China, and it was devastating for them. Many factories closed and there was, to put it mildly, “civil unrest.” I saw what was happening and didn’t like it, for them, not for us. I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen. Because of this deal, everything quickly stabilized and China got back to business as usual. Everybody was happy! That is the good news!!! The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!
in all honesty, a pause as long as negotiations are ongoing/progressing is just a “I’d like the leverage but it hurts ourselves too much right now and once everyone stops trading it isn’t leverage anymore”.
Yes. US wants to take advantage of their economic situation and market but it seems like their assumptions might not be holding up in negotiations
Biggest borrower tag comes with own sets of problems. You cannot dictate your lenders everything and maybe it’s a harsh truth they are facing with China.
It’s a pity because US companies are getting entangled in all this too. Some due to their own choice but others unwillingly.
There’ll be new episodes to this show on a regular and sustained basis. I would either:
try to stay on top of the news and make high confidence very short term high leverage bets on the direction of any individual indice/ETF/stock/bond. Very time consuming, high chances of failure, potential for skyrocketing wealth.
tune out the tariffs news. They’ll go all over the place and new decisions and deals might not have a shelf life of more than 2 days in the current environment. Just assume chaos, tune out the noise, make sure you have conviction in your investing strategy and follow it.
The intermediate position of dilettantly following tariffs news and trying to make sense out of it seems to have a poor ratio of time/energy spent to actual benefits to me.
TACO is what the market seems to think. And besides, I’ve been wondering if my own disgust in Trump and everything about him clouds my judgement in terms of thinking about investing.
I mean, let’s not kid ourselves: we are being compensated for our risk and lack of enjoyment of our money. As long as Rio Tinto pays bribes to rape the environment in second/third world countries, Apple/Amazon employ slave labour, Google/Meta take our data, UNH refuses claims of overworked and overstressed employees trying to be Kim Kardashian…we should be happy. Are we not entertained?
My point is, companies compensate risk for these reasons too, and US companies are particularly good at it, do we have reason to believe they’ll suddenly become incompetent?
Thankfully old men don’t stay old for long.
Otherwise, anything called “Truth” is about as truthful as “Democratic People’s Republics” are democratic.
Check justetf, you can select to have only synthetic.
The main benefit is that they don’t have 15% withholding, and are not US domiciled.
Given the setup with no withholding tax (it’s explicit that synthetic stuff matching wide index are exempt), I don’t think they will do as many shenanigans there (has more risk of disrupting financial markets, and Bessent is a finance guy).
It could also be other way around
Could it be that your (mine and other’s) past experience of enjoying US stock market gains are clouding our judgement and we are either ignoring or denying the risks brewing in US. And we are just trying to find a reason to believe that US past story will continue even if there are so many random things happening.
When we invest in individual stocks - we always look at management of the company as one of the key components. Is management of the country a parameter while investing in equity markets ? Or governance & government has no role whatsoever in future investment returns of companies originating from the same country.
“We’re already dealing with a market where Treasuries, to foreign investors, probably aren’t the most attractive investment,” said Michael Brown, a strategist at Pepperstone Group, a brokerage firm founded in Melbourne whose clients are all outside the US. Brown said he got so many inquiries from concerned clients that he quickly cobbled together a report breaking down the measure. “If you’re now talking about massively unfavorable tax treatment, then it’s just another reason to stay away.”
I’m increasingly convinced that the market doesn’t react to news like this in realtime, but when it gets spread through social media and news.
We see it here with the 899 section and back in January with deepseek, the market seems to react a week+ ( admittedly harder to confirm cause and effect for this week 899 issue) after the knowledge becomes publicly available, with in both cases me discussing the topics way closer to release.
That said I’m not confident enough to trade on it as I have no idea what will happen to the markets when. For example I’m still surprised deepseek had the impact on the market it did, and how stuck up people still are (heard this week on bloomberg) that deepseek supposedly lied or “they used chathpt so it is not real”.
Investing is still pretty human and narrative centric.
Frankly I’d be curious if with our capability to reclaim/get tax credits on US ETF WHTs we even need to give a crap in whether the US will tax income in any way other than capital flight dropping prices temporarily.
I think bigger worry should be the actual returns
15% or 35% WHT isn’t going to be such a big issue for us
But imagine if you create an effective extra cost for equity investors then other markets become more attractive be default . This will cause capital to flow away.
0.3% additional drag on returns is not such a small thing when expect returns from equities in 5-6%
We are already seeing this year (this is clear show of capital flow away from US) . How long will this continue , no one knows
US markets underperforming the rest of world
US bond yields one of the highest in Dev markets (indicate possible low demand for US bonds)
Yep, people will chase past performance like headless chicken. Capital flight dropping US prices will make the US attractive again in the longer term, that’s why I said I am mega bullish for the long term.
Yeah, I know, what I don’t know is whether this unilateral trampling of the treaties will go unanswered. I still think Switzerland will slip by/do something clever.
Yeah could be. Anyways I don’t plan to time the moves. I am mainly looking at this from risk mitigation perspective. I don’t really think it matters in long run where exactly you invest from returns perspective . Most diversified portfolios should return similar returns . But we also need to take care of concentration risks etc.
For time being 50% or below US exposure is my plan.
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